US primary insurer Allstate has now secured the upsized $250 million target for a mix of per-occurrence and aggregate collateralized reinsurance from its new Sanders Re III Ltd. (Series 2023-1) catastrophe bond.
Allstate came back to the cat bond market earlier this month, with a target to secure at least $225 million of catastrophe reinsurance from its first issuance of this year, across a proposed three tranches of notes that were offered to investors.
Allstate has sponsored 16 successful cat bond issuances since it entered the market in 2007 and the Sanders Re programme is an annual feature, with at least one new issuance every year.
Details of every cat bond from Allstate can be found in our Deal Directory.
As we later reported, the riskiest Class C tranche of notes proposed with this new Sanders Re III 2023-1 cat bond were particularly risky, and structured as zero-coupon notes, but those notes got pulled while at the same time the target for protection across the remaining two tranches had risen to $250 million.
Now, we can report that this upsized amount of capital market backed and securitized reinsurance protection was successfully secured by Allstate.
As a result, Allstate will now benefit from $100 million of per-occurrence reinsurance and $150 million of annual aggregate reinsurance, against losses from multiple US perils nationwide (ex-Florida), across a four-year term with this Sanders Re III 2023-1 cat bond.
The Class A per-occurrence tranche of notes remain secured $100 million of cover for Allstate, with an initial base expected loss of 0.9382%.
This Class A tranche was first offered to investors with price guidance of 5.75% to 6.5%, but as we reported that had been lowered to the bottom-end of guidance, fixed at 5.75%, which is where the notes were priced on Friday, we now understand.
The Class B annual aggregate notes upsized to provide Allstate $150 million of protection, with an initial base expected loss of 0.7402%.
The Class B notes were initially offered with price guidance of 15% to 15.75%, but that was narrowed to between 15.5% and 15.75%, and we’re now told these aggregate cat bond notes priced with a spread of 15.5%.
Despite failing to place the riskiest layer of notes in the cat bond market, Allstate has once again expanded its capital markets supported reinsurance with this new issuance.
You can read all about this Sanders Re III Ltd. (Series 2023-1) from Allstate and every other catastrophe bond issuance in the extensive Artemis Deal Directory.
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